Employees who travel for business meetings or who work in multiple jurisdictions and have regional responsibilities can fly under the radar in some circumstances because they are not the traditional expatriates or assignees generally tracked by a human resources department, Jason Russell, managing director at Deloitte Tax LLP, said May 19.
“Trying to keep tabs on employee whereabouts can be a full time job,” said Russell, who spoke at the American Payroll Association's 2018 Congress in National Harbor, Md.
The tax consequences of mobile employees often depends on the work that an employee is doing, Russell said. The safest assumption is that whatever an employee is doing is of substance and value, he said.
Critical considerations for payroll professionals trying to ensure the compliance of an increasingly mobile workforce are the availability and accuracy of data, Russell said.
The accuracy of source data is important to determine which data is the “record of truth” when discrepancies among internal records are discovered, he said.
Responsibility for accurate data often falls on the business traveler because, in some circumstances, others may have limited knowledge of the employee’s actual travel and locations, Russell said.
As a company’s global mobility increases so, too, does the importance of managing company and employee needs and compliance with a jurisdiction’s regulatory requirements, Russell said.
Employees may be concerned with reconciling balance sheets and the compensation they receive, as well as with getting their questions answered, Russell said.
Employers may find it helpful to provide employees with a help desk to address questions about the potential tax implications of overseas activities and payroll documents in their tax preparation processes, Russell said.
Equipping employees with tools to encourage compliance is advantageous for employers, Russell said, noting that employees are becoming more savvy.
Equity compensation programs, such as stock options or incentive pay, present additional challenges to calculating taxes on employees, Russell said.
Many jurisdictions tax a portion of an award even if the employee is not in that jurisdiction at the time of the taxable event, potentially exposing employers and employees to trailing tax liabilities, Russell said.
“This trips up employers all the time,” Russell cautioned, noting that trailing liabilities are something that he has seen the Internal Revenue Service frequently audit.
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